This paper investigates two explanations for why industries might become more productive over time. The first explanation, termed the real productivity case,' is one in which firms become more productive and this leads to more productive industries. The second explanation, termed the...

The story line a recent trade frictions between the U.S. and Japan in the auto market goes as follow. Initially, there was not much trade Japanese cars were made in Japan with mostly Japanese parts and the same was mostly true of North American cars.